According to a report by the Financial Times citing data from Bloomberg, the biggest banks in the United States are experiencing significant losses as borrowers fail to repay billions of dollars in loans.
JPMorgan loses over a billion dollars
JPMorgan Chase, Bank of America (BofA), Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley have reportedly written off a total of $5 billion in loans during the second quarter of this year. These write-offs are believed to be a result of inflation and increased interest rates, which are negatively affecting consumers.
Banks have officially recognized major losses in the value of assets on their balance sheets through write-offs. The primary source of these multibillion-dollar write-offs, according to banking giants, is credit card debt.
JPMorgan Chase saw losses of $1.1 billion in bad credit card debt last quarter, which is an increase of over 66% compared to the previous year.
Meanwhile, BofA’s credit card loans account for around 25% of the lender’s unrecoverable debt.
The six banks are facing another issue with the struggling commercial real estate industry. As more and more workers are telecommuting for several days a week, there has been a noticeable decrease in demand.
Other important financial news
The Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) found that Bank of America imposed hidden fees, withheld credit card rewards, and opened fraudulent accounts over a period of several years.
Specifically, the bank is being fined for “systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization.”
Account holders affected by the bank’s illegal practices will receive a direct payment of $100 million, while the bank will pay $90 million in penalties to the CFPB and $60 million in penalties to the OCC.
